schUSD

schUSD is the yield-bearing version of chUSD, and the other half of Chateau's dual token system. Minted when chUSD is deposited and staked into Chateau's ERC-4626 vaults, the amount of schUSD received by users is calculated based on the prevailing schUSD-to-chUSD value.

Current schUSD-to-chUSD Ratio (Price) can be determined by

$$Value= ( chUSD Staked + Rewards) / schUSD Supply$$

following the above formulas, the schUSD-to-chUSD value at any point of time reflects the total supply of schUSD relative to the total chUSD staked and accumulated yield in chUSD, and is a gauge for cumulative yield performance. As such, the value of schUSD increases over time as schUSD accrues profit from the underlying NAV increase in Covenant VC's fund.

NAV Updates and reconciliation

Chateau receives NAV updates weekly every Friday or Saturday. Covenant VC's performance data for Chateau's portfolio is published onchain through our Pyth oracle. Chateau updates the onchain NAV of schUSD's 4626 vault, through the addition of new chUSD rewards (transferInRewards), or subtracts chUSD from the vault (transferOutRewards), corresponding to NAV increase or decreases. Weekly reconciliation operations ensure onchain schUSD vault performance tracks the value of the underlying fund offchain. Chateau executes fiat deposits and withdrawals as needed between the fund and our Custodian partner, ensuring sufficient liquidity for chUSD redemptions.

Accounting

Covenant VC follows US GAAP accounting standards, where new loans are marked to their face value upon purchase.

Liquidity

See How Liquid is it?

Rewards Vesting

schUSD rewards vest over 6 days. This mechanism prevents front running of the yield distribution.

Withdrawal Cooldown

Users can unstake schUSD for chUSD at any time. Unstaked chUSD is redeemed immediately, but transferred to a Silo contract. Users can call withdraw() after a cooldown period of 30 days and chUSD can be withdrawn.

Fees

2% management fee and 20% performance fee is charged upon the underlying fund. Fees are withdrawn quarterly from the NAV. Additionally, 5% is deducted for the reserve fund. The reserve fund is used in the event of significant drawdowns, hacks, or other adversarial events.

Fees and Insurance Fund

5% of Fees is subtracted quarterly to the reserve fund.